In a meeting with foreign investors at the Overseas Investors Chamber of Commerce and Industry, Special Assistant to the Prime Minister on Revenue Haroon Akhtar says that macro-economic conditions have improved and the government is set to launch growth-oriented economic policies in the next federal budget. No doubt the government wants to increase foreign direct investment and the prime minister and his team are trying to woo foreign investors to tap the country’s economic potential. However, it is a dilemma in Pakistan that the policymakers mend one thing and spoil the other and that is what is going to happen as a result of the recently announced auto policy. The new investment policy should not push the existing investors to the wall as grant of incentives should be fair and just for the new and old as well as local and foreign investors. No doubt the China-Pakistan Economic Corridor project is a game-changer for the economy but prudent policies are required to exploit the benefits of the emerging situation.
According to newspaper reports, a major carmaker has threatened to shift its business to Iran after the government announced incentives for the European brands. The carmaker in Karachi having the market share of over 50 percent sees Iran as an attractive market than Pakistan. The car manufacturing sector has already rejected the new auto policy on the grounds that it lacked incentives for the players already in the business. The company was planning to investment up to $1.5 billion in coming years in technology transfer through joint ventures with Japanese auto sector. However, the lopsided policies always resulted in failure. Another hurdle in the way of the new investment is uneven tax policies. At the first stage, the government should have to invite investment without asking the source of income. The government should declare the country as tax haven at least for 10 years and see what happens.
The world economy is changing at a fast rate and policies should also be in conformity with the changing circumstances. The UAE is a tiny state but its size of economy is larger than Pakistan. There is a need to look into the circumstances which prodded the investors from all over the world, including Pakistan, towards UAE without any media hype. Pakistan has vast natural and human resources but is lagging behind even some African nations in the business and investment sectors. Pakistan can be a hub of auto manufacturing if the government leaves the hackneyed path and adopts revolutionary steps. At least it should spare the auto sector from harsh tax laws. It seems the policymakers in Pakistan are refusing to accept local as well as foreign investment.
